if i were to sell 20-30K in metal - tax consequences?

Discussion in 'Bullion Investing' started by 9guns, Mar 7, 2011.

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  1. medoraman

    medoraman Supporter! Supporter

    Guy, your basis will be what you had in them. The complicating factor is that they were gifts. Since I doubt you paid taxes on the value of the gift when you received them, your basis is $0. If your accountant chooses to treat it as a like kind exchange, the basis of your new coins still will be $0, but no tax will be due. If he says it cannot be like kind exchanged, I would argue you sold them for the $1800 value, not the $2200 value, since essentially the dealer sold you $2200 of coins for $1800, which is a normal dealer price discount. In that case your gain would be $1800, which would be a long term collectible capital gain.

    Hope that helps.

    Edit: forgot to add, the basis in your new coins, since you recognized the gain now, would be $1800 in the second scenario. That would be what you would use to offset your sales price when you sell them.

    Chris
     
    medoraman, Mar 10, 2011
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  3. coleguy

    coleguy Coin Collector

    That makes much better sense. Thanks Chris. I could never be an accountant :\
     
    coleguy, Mar 10, 2011
    #42 + Quote Reply
  4. yakpoo

    yakpoo Member

    All this income tax "accounting" hurts my brain. Can't we go to a National Sales ("Fair") tax and forget about all this nonsense?
     
    yakpoo, Mar 10, 2011
    #43 + Quote Reply
  5. GDJMSP

    GDJMSP Numismatist Moderator

    Regardless of how it works out for Guy, there is something that is extremely important for all collectors to recognize and take note of in this thread. That is that every coin you ever acquire, you need to keep specific records for that coin. What those records need to entail is the following -

    1 - date you acquired it
    2 - who you acquired it from
    3 - cost basis (what you paid for it) of the coin. If it was a gift that basis is 0. If it was found in change or roll searching that basis is face value. *
    4 - if sold, the amount you sold it for and to whom. And keep records of losses as well as gains for losses offset gains.
    5 - keep records & receipts for everything that has anything to do with your collection. If you buy a safe for home, keep the receipt. If you buy 2x2s, flips, albums, coin books, cleaning supplies, slab boxes, grading fee receipts, insurance, hotel & travel receipts when going to coin shows - anything and everything that has anything to do with your collection in any way, you need to keep records on it.

    * with some trades and some sales, whether with a dealer or a private individual, things become more complicated. Like exchange rules come into play sometimes and sometimes they don't, it depends on the situation. Talk to your accountant to get answers on that. But if you don't keep the records then you are lost before you ever start.

    But the primary issue is this - if at some point the IRS ever questions one of your returns all of these things will come into play. And if you do not have these records mentioned above then your basis for the coins you sell or trade is assumed to be 0 by the IRS and you will owe taxes on the entire amount of any proceeds.

    Don't let yourself get into this situation. KEEP records for every single coin ! For if you don't you could end up in a mess the likes of which you have never seen.

    In short, when it comes to tax consequences, coin collecting is far more complicated than buying and selling stocks or any other investment vehicle in the eyes of the IRS. But if you keep the records, and even if you lose money on your collection, which is what happens to most collectors anyway, you need those records. For with them you can deduct losses and pay less taxes than you normally would. You can even have carry-over losses for following years.
     
    GDJMSP, Mar 11, 2011
    #44 + Quote Reply
  6. swagge1

    swagge1 Junior Member

    Just to clarify... If you go to coin show and sell some bullion for $1000 and you paid $500 for it you have made $500. By the law you owe taxes on $500?
     
    swagge1, Mar 11, 2011
    #45 + Quote Reply
  7. AlexN2coins2004

    AlexN2coins2004 ASEsInMYClassifiedAD

    yea you add that $500 onto your income taxes and you have to pay like 28% of that in taxes... :heated: I HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE HATE THE IRS!

    seriously...I hate those guys... 'spits' 28% seems like the government is trying is just looking for more money to waste...the more they can tax...the more they can waste...:rolleyes: and I get we need to pay taxes too...but 28%?!?!?!?! when they already have trillions of income?!?!?! something is wrong here... how much taxes do you have to pay on making $100 from selling stocks? I figure it's just income added to the stack of money you claim on your income taxes...
     
    AlexN2coins2004, Mar 11, 2011
    #46 + Quote Reply
  8. swagge1

    swagge1 Junior Member

    These are most likely cash transactions, and I'm pretty sure no records with names are kept... Im just going to stop right here. I guess its kind of like how Turbo tax asks "Did you buy any out of state goods from magazines, internet, ect..."

    $0.00
     
    swagge1, Mar 11, 2011
    #47 + Quote Reply
  9. medoraman

    medoraman Supporter! Supporter

    Yes, of course. It has always been that way, though don't forget to deduct any other costs, like traveling to the show to sell them.

    Btw, don't hate on the IRS. If you hate the rules, hate on Congress who passes the rules and tells the IRS on how to collect. The IRS is simply doing what by law, (Congress), they are REQUIRED to do. I was on a Federal IRS committee, and most IRS people are nice people, they simply have no choice in how to do their job. It is Congress that has an unlimited appetite to spend your money.
     
    medoraman, Mar 11, 2011
    #48 + Quote Reply
  10. TopcatCoin

    TopcatCoin TC

    I am surprised that there is not some limit or threshold that would need to be crossed to report. I can see why in the case of the OP's 20-30K, but what if a silver eagle purchased for $20 is sold for $40? My solution to all of this is to never sell and give it to my son or daughter someday as a gift. TC
     
    TopcatCoin, Mar 12, 2011
    #49 + Quote Reply
  11. pale ridder

    pale ridder Junior Member

    Just report your net loosings to the goverment ie.... you bought the silver at $49 in 1979 now you sell it at $35 thats a $14 beating and you dont own them a dime!! If they try to argue with give them all your PM, one shot at a time!!!
     
    pale ridder, Mar 15, 2011
    #50 + Quote Reply
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